Whirlpool Legal Responsibility

The legal responsibility component of the Corporate Social Responsibility (CSR) definition is an expected responsibility. Whirlpool is expected to obey laws and regulations that affect their stakeholders: employees, consumers, owners, community, and others. The official company statement in regards to the basic code of conduct is “There is no right way to do a wrong thing.” (Whirlpool Corporation, 2006)

To begin with, Whirlpool has an established and published Code of Ethics, copyrighted in 2006 that establishes the foundations of the company’s principles in a clear and concise manner for employees, officers, directors, and subsidiaries in regards to legal obligations. In addition, Whirlpool has an active “Supplier Code of Conduct” that establishes expectations that international suppliers should be following if doing business with Whirlpool which are similar to Whirlpool’s own Code of Conduct. Whirlpool also has an established Corporate Governance Guidelines that establish rules for the Board of Directors. One of the functions of the Board is to regularly evaluate the company’s adherence to U.S. laws and NYSE listing rules and law.

Whirlpool has a company website that is easy to navigate for all concerned stakeholders, contributing to the transparency of the company. The home page has a clearly visible link in the top right corner to access the product recalls. In January of 2010, Whirlpool launched an easy-to-use rebate finder tool for consumers to be able to locate cash incentives for energy replacement appliances by using their zipcode. For investors, the financial information of the company is not buried but easily accessible with a few clicks. There is a tab on the home page called “Responsibilities” that has drop-down lists addressing all of the CSR aspects of the corporation. This is where all the corporation’s employee policies are listed.

Whirlpool has its own team of lawyers in its legal department. Whirlpool developed a program that reduced the number of outside firms that it contracts with for class action litigation to seven, down from over 200 firms. These firms are paid on fee basis with bonuses for incentives such as settling litigation as quickly as possible. These firms are well versed in Whirlpool products which is also a time savings for both parties. This has been a substantial cost-savings for the shareholders of the company, reducing costs by over 40%. In June of 2012, Whirlpool and one of its outside counsel firms, Wheeler Trigg O’Donnell LLP were recognized as “ACC Value Champions” for their collaboration by The Association of Corporate Counsel.

Whirlpool actively monitors what it considers unfair practices by its competitors and solicits the federal government to enforce American fair trade laws. In March of 2011, Whirlpool filed anti-dumping charges against Korean manufacturer LG and Samsung accusing them of selling bottom-mount refrigerators manufactured in Korea and Mexico in the United States below fair market value, thus endangering the jobs of Whirlpool’s US employees. A countervailing duty petition was also filed to investigate unfair subsidies from the Korean government for these refrigerators. In December of 2011, Whirlpool filed similar anti-dumping and ant-subsidy petitions against LG and Samsung clothes washers. In the case of the bottom-mount refrigerators, the US Department of Commerce (DOC) ruled against LG and Samsung but the U.S. International Trade Commission (ITC) determined that the U.S. market was not materially injured by these actions so no duties were imposed. In the case of the clothes washers, the DOC has sided with Whirlpool and plans to impose antidumping tariffs on LG, Samsung, and Daewoo. The amounts should be determined by ITC in February of 2013.

Not all of Whirlpool’s practices are favorable. Clyde, OH is headquarters for Whirlpool’s washing machine manufacturing and employs 3,400. Clyde OH also had a region being called the “Clyde Cancer Cluster” because of the number of families living close to the Whirlpool Park, which was built for children to play in, that have members who were stricken with cancer. An EPA report released in November of 2012 found soil under the basketball court that had toxic metal and toxic PCP levels in it. (Weston Solutions, 2012). Some of the samples were found over 9 feet deep. Whirlpool’s response so far is that they have not been given access to the area by the current owners to conduct their own tests and they will move forward with evaluation as soon as they are allowed. Significant legal events of last 7 years:

·August 2005: Whirlpool agreed to settle a discrimination complaint with the US Department of Labor for failure to hire any of 800 qualified African-American applicants between 1997-1998. Whirlpool’s position is that it was the result of a faulty employment test that it no longer used. ·March 2006: Whirlpool completes acquisition of Maytag after the merger is approved by the US Department of Justice, satisfying US anti-trust regulations. This purchase made Whirlpool the largest appliance manufacturer in the world. ·June 2010: Whirlpool issued recall of 1.7 million dishwashers sold in U.S. from 2006-2010 due to potential fire hazard. Regulatory filings warned of potential charge as a “corrective action to address a supplier-related quality and potential product safety issue.” (Reuters, 2010)

·September 2010: Embraco North America, a Whirlpool subsidiary based in Brazil, agreed to plead guilty and pay $91.8 million in fines for conspiring to fix prices of refrigerator compressors with Panasonic from 2004-2007 in U.S. and abroad in violation of U.S. Antitrust law. Moving forward, Whirlpool should strive to remain as transparent as possible in regards to its financial statements and disclosures. Regarding employees, Whirlpool has established guidelines which should be enforced, but it should also actively review hiring practices and provide oversight in any troubled employee markets when lawsuits are filed. In Clyde, OH where the EPA just completed the study of toxic chemicals, Whirlpool should be more proactive in addressing the cleanup of the area, not just state that they have not been allowed access to run their own tests. In overseas markets, Whirlpool should audit the practices of its subsidiaries to ensure compliance with established corporate policies.

Sources

Coyne, Brendan. (2005, August 11). Small win at Whirlpool for minority workers. Retrieved from The NewStander website http://newstandardnews.net/content/index.cfm/items/2207 DiClerico, Daniel. (2012, July 30). Whirlpool wins point in antidumping case against Samsung, LG. Retrieved from Consumer Reports website
http://news.consumerreports.org/home/2012/07/point-whirlpool-in-anti-dumping-case-against-samsung-lg.html Householder, Mike. (2010, Septemeber 30). Panasonic, Whirlpool Subsidiary to plead guilty for price-fixing. Retrieved from USA Today website http://usatoday30.usatoday.com/money/companies/regulation/2010-09-30-panasonic-embraco-price-fixing_N.htm Newton Independent. (2012, November 14). Whirlpool Park near Clyde, Ohio found to be toxic dumping ground. Retrieved from http://www.newtonindependent.com/newton_independent/2012/11/whirlpool-park-near-clyde-ohio-found-to-be-toxic-dumping-ground.html Reed, Elizabeth. (2012, November 14). Whirlpool responds to Clyde cancer cluster claims. Retrieved from http://www.northwestohio.com/news/story.aspx?id=825273#.UP9WA1Lhfro Reuters. (2010, June 3). Whirlpool recalls 1.7 million dishwashers. Retrieved from http://www.reuters.com/article/2010/06/03/us-whirlpool-idUSTRE6522F120100603 Salopek, Jennifer, J. (2012, June). Whirlpool Corporation and Wheeler Trigg O’Donnell LLP. The quest for early resolution, lower costs. Retrieved from http://www.acc.com/valuechallenge/valuechamps/2012champ_profile93.cfm Weston Solutions, Inc. (2012, September 28). Site assessment report for the Whirlpool Park Site. Green Springs, Sandusky County, Ohio. Page 6. Retrieved from http://www.epa.gov/region5/cleanup/easternsandusky/pdfs/whirlpool_sa_report.pdf Whirlpool Corporation. Supplier Code of Conduct. Retrieved January 24, 2013 from https://suppliers.whirlpool.com/pub/Suppliercodeofcoduct.html

Whirlpool Corporation. (2006). Code of Ethics. Retrieved from http://www.whirlpoolcorp.com/shared/content/documents/NAR_English_Final.pdf

Whirlpool Corporation. (2010, January, 25). Whirlpool Corporation provideds online consumer tool for ‘Cash for Appliances” rebate program. [Press release]. Retrieved from http://investors.whirlpoolcorp.com/releasedetail.cfm?ReleaseID=531317